24 Jun What accessing capital looks like for Indigenous entrepreneurs – and how we can do better
From left to right: Chelsee Pettit, president and founder, aaniin retail inc.; Carol Anne Hilton, founder and CEO, Indigenomics Institute and the Global Centre of Indigenomics; Shannin Metatawabin, CEO, National Aboriginal Capital Corporations Association; Zechariah James, social enterprises manager, Native Canadian Centre of Toronto; Dan Adams, vice-president, Indigenous Banking, BMO; Rebecca Tabobondung, director, Spirit of Health. ALYSON HARDWICK
One year after Chelsee Pettit launched aaniin retail inc., a brick-and-mortar Indigenous department store in downtown Toronto, she ran out of funds and had to close her physical location.
“We’ve been so hyper excluded from that [physical retail] market,” Pettit says. Her dream of maintaining a physical storefront full of Indigenous-owned brands was stopped short when more capital was needed, and aaniin was forced to pivot to an online-only model.
Though aaniin retail inc. continues growing online, Pettit says Indigenous-owned businesses are often pushed into the digital sphere to reduce costs, reinforcing the absence of Indigeneity already felt in urban centers.
Pettit isn’t alone in facing these challenges. The ‘At the Table’ roundtable, held at The Globe and Mail offices on Apr. 22, 2024, was the second in a series of four intimate discussions, presented by Mastercard, to connect Indigenous business owners and industry leaders. Here, six industry leaders came together to discuss one of the biggest hurdles for Indigenous entrepreneurs: access to capital.
Former deputy governor of the Bank of Canada Lawrence L. Schembri has said the Indian Act’s restriction on property rights limits access to credit, stunting economic growth of the individual and their community. This puts Indigenous economic growth at a disadvantage.
“It doesn’t put an Indigenous entrepreneur in their own community on a level playing field,” says Dan Adams, vice-president of Indigenous Banking at BMO.
Carol Anne Hilton, founder and CEO of the Indigenomics Institute and the Global Centre of Indigenomics, calls for a re-framing of the relationship between Indigenous entrepreneurs and financing. Don’t think about these entrepreneurs as not having access to capital, she says.
“[Let’s] eliminate that space where value doesn’t exist for Indigenous people,” Hilton says. “How is capital isolated in terms of access to Indigenous entrepreneurs?”
Lending and banking institutions need to take substantial action
Pettit opened her store thanks to the $10,000 award from the Mastercard x Pier Five Fund for supporting small businesses. “The whole experience itself was just very eye opening to me of what could be the potential for my business and for all Indigenous entrepreneurs,” Pettit says. When she needed more funds, Pettit prepared a 35-page application for an Indigenous Financial Institution (IFI) grant to maintain business operations and help it grow.
IFIs provide term loans, allowing entrepreneurs to develop their businesses without worrying about debt, but they’re not all full-service banks, despite having a typical bank’s lending criteria.
Pettit’s application was denied. The IFI’s feedback stated a physical store would be low profit and high risk, advising her to focus on building a digital presence.
Zechariah James, social enterprises manager at the Native Canadian Centre of Toronto (NCCT), works with entrepreneurs like Pettit on similar efforts to secure support for their enterprises. He says many Indigenous entrepreneurs have no time or resources to prepare these lengthy reports, especially when many work alone or in small teams, juggling the many tasks involved in keeping a business afloat.
“We’re a little too busy just trying to stay alive and have the bills paid,” he says.
Shannin Metatawabin, CEO of the National Aboriginal Capital Corporations Association (NACCA), says Indigenous small businesses need more unique attention and support.
“If you want to do business with Indigenous communities, you have to support the whole spectrum of entrepreneurs,” Metatawabin says.
Grants are crucial for buying down loan risk. Though IFIs try to fill that gap, Metatawabin says banks could step in, providing more opportunities and long-term services to nurture the business’s development, especially if they appear low-profit high-risk.
Adams said the same issues came up in BMO’s consultation process with Indigenous communities two years ago. “All lenders have to step up and be better,” he says.
Adams calls for banking institutions to learn the history, laws and cultures of Indigenous communities. Many Indigenous people don’t have the typical information required by banks like tax slips and high credit scores. Adams said that’s no excuse for lenders.
“It might take a few more minutes, but we have the ability to do the due diligence,” he says.
In discussions following the roundtable, Nishant Raina, small-and-medium enterprise business lead at Mastercard, Canada, said the company is committed to supporting the unique needs of every entrepreneur.
“We understand the pain points that exist today in traditional one-size-fits-all lending,” Raina said. “Mastercard research shows small businesses want better access to financial technology to take control of their finances, access new capital, and ultimately, succeed.”
Mastercard’s global consumer-driven finance solutions, not available in the Canadian market yet, allows for greater flexibility in lending by evaluating holistic consumer-permissioned data, such as timely bill payments, instead of relying on the traditional credit score.
“These innovations can help give a leg up to Indigenous entrepreneurs that may not otherwise have the chance,” Raina said.
“If you want to do business with Indigenous communities, you have to support the whole spectrum of entrepreneurs,” Shannin Metatawabin says during the roundtable. ALYSON HARDWICK
Redefining capital to encompass money, mentorship and community support
Sometimes, it’s not the first investment that’s hardest for entrepreneurs to access; it’s the investments that follow, allowing them to sustain and scale their business.
“While the entry space is important, who is leading within that place of scaling?” Hilton asks. “That leadership is essential in the story of the growth of the Indigenous economy.”
Hilton says creative spaces, like Pow Wow Pitch, are places for Indigenous entrepreneurs to redefine capital and value outside the Eurocentric model, alongside Indigenous media like Muskrat Magazine.
“I grew up in an era where there was zero Indigenous content,” says Rebecca Tabobondung, founder and publisher of Muskrat magazine. “My main motivation was to have representation and Indigenous stories be accessible.”
Tabobundung is also the director of the Spirit of Health app, an app that bridges art and technology to share traditional Indigenous knowledge on maternal health with users around the world. For her, accessing capital enables access to information – and that starts with technology.
“It’s hugely important if you want to have that dialogue with our young people,” she says.
Like many Indigenous entrepreneurs, Tabobundung is working to build generational wealth, not just for herself but for her community.
“This is a story of now, but [what we do now] will have generational effects in terms of business,” Hilton says. “This is about changing our personal stories, our family stories, our communities.”
Empowering economic development to uplift communities underpins the vision for the Adaawe Indigenous Business Hub in Ottawa. Metatawabin said NACCA started the hub to help budding entrepreneurs access technology and each other.
“They’re there all the time because it’s a very lonely thing to be a businessperson,” he says. “When they have that space and when they get engaged with each other … it’s just so neat to go in there.”
Metatawabin says Adaawe Hub welcomes almost 300 Indigenous entrepreneurs from the Ottawa region, maximizing the space by running workshops and events for each other.
James adds that mentorship doesn’t replace capital; the two must go hand in hand. The NCCT holds live virtual spaces to provide training and support, but the events can’t run without funders.
“There needs to be continuous support for Indigenous entrepreneurship training and business hubs,” he says. “We have to stay committed to it.”
Raina stated following the roundtable that Mastercard recognizes the need for sustained support by holding mentorship programs, networking events and personalized educational resources. For example, more than a dozen members of the Mastercard team serve as virtual mentors and judges, offering valuable insights and expertise to Indigenous entrepreneurs through Mastercard’s continued partnership with Pow Wow Pitch.
“To continue supporting Indigenous businesses, we need to advocate more than ever for policy changes that foster inclusive economic growth,” Raina said. “And keep having bold and honest conversations like this to further raise awareness of the work that still needs to be done.”
Pettit hopes corporate sponsors will recognize that dedicated time and resources are necessary for steady economic development, especially since many Indigenous entrepreneurs often start businesses on their own from the ground up.
“If [you’re] just doing this for reconciliation for a couple years and then we’re just back to trying to figure it out ourselves, then it’s not going to go anywhere,” Pettit says.
Content from: GLOBE CONTENT STUDIO